Pennie v Pennie

[2010] NSWSC 1070

CITATION:	Pennie v Pennie [2010] NSWSC 1070
HEARING DATE(S):	7 October 2010
JUDGMENT OF:	Hammerschlag J
EX TEMPORE JUDGMENT DATE:	7 October 2010
DECISION:	Cross-Summons dismissed with costs
CATCHWORDS:	EQUITY – PRACTICE AND PROCEDURE – REMEDIES – s 76(1) of the Trustee Act 1925 (NSW) provides that where an order is made by the Court directing the sale or mortgage of any land, the Court may, if it thinks expedient, make an order vesting the land or any part thereof for such estate as the Court thinks fit in the purchaser or mortgagee or in any other person – the claimants sought a vesting order and an order that they be permitted to sell property in respect of which the Court declared they have a charge securing payment to them of a fixed amount – whether the Court retains a discretion to make the orders sought – where the opponent has a costs order in his favour arising from the same proceedings in which the declaration was made which will inevitably reduce the amount owed to the claimants and may wipe it out altogether – where if the property was sold the penurious circumstances of the claimants would mean that there would be little prospect that anything paid over would be recovered – HELD – the orders sought were discretionary and the discretion should in the circumstances of this case be exercised against making the order sought
LEGISLATION CITED:	Legal Profession Act 2004 Trustee Act 1925 (NSW) Conveyancing Act 1919 (NSW)
CATEGORY:	Principal judgment
CASES CITED:	Williams v Legg (1993) 29 NSWLR 687 Ngatoa v Ford (1990) 19 NSWLR 72
PARTIES:	Harry George Pennie - Plaintiff Stuart James Pennie - First Defendant Michelle Jane Pennie - Second Defendant
FILE NUMBER(S):	SC 2010/312434
COUNSEL:	J.A. Trebeck [Plaintiff/Cross-Defendant] D.K.L. Raphael [Defendants/Cross-Claimants]
SOLICITORS:	Herbert Weller Solicitor [Plaintiff/Cross-Defendant] Mersal & Associates Pty Ltd [Defendants/Cross-Claimants]

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMMERSCHLAG J

7 OCTOBER 2010

2010/312434 HARRY GEORGE PENNIE -V- STUART JAMES PENNIE

EX TEMPORE JUDGMENT

1 His Honour: On 27 May 2010, after a two day hearing, Pembroke J gave judgment in favour of the plaintiff (cross-defendant) for possession of land at Wilberforce, New South Wales (“the Land”) and granted leave to the plaintiff to issue a writ of possession. His Honour further declared that the defendants (cross-claimants) are entitled to an equitable charge over the Land to secure the sum of $147,201.40 together with interest at Supreme Court rates from the date possession was given to the plaintiff. Finally, his Honour ordered the defendants to pay the plaintiff’s costs of the proceedings, on an indemnity basis from 26 October 2009 and otherwise on an ordinary basis. The orders made did not include one directing or authorising the sale of the Land. For their part the defendants have a costs order in their favour for the costs thrown away when, on an earlier occasion, the hearing was vacated as a result of the plaintiff’s counsel encountering a cardiac problem.

2 On 3 August 2010, the defendants gave up possession of the Land to the plaintiff.

3 The plaintiff has presented and served on the defendants an application under s 369 of the Legal Profession Act 2004 to have his costs assessed. The unassessed costs and disbursements (excluding costs of assessment, filing fee and the costs assessor’s fees) total $363,448.25. The assessment will, I was informed from the bar table, take some months to be made.

4 Against this background, the defendants move by cross-summons filed on 29 September 2010 for a declaration that the plaintiff holds the Land subject to an equitable lien or charge in the sum of $147,201.40 in favour of the defendants and that the Land vest in them with power to sell it. As well, they seek ancillary orders of a procedural nature to facilitate the sale.

5 The application is made pursuant to s 76 of the Trustee Act 1925 (NSW) (“the Trustee Act”), which provides as follows:

76 Sale or mortgage of land
(1) Where an order is made by the Court directing the sale or mortgage of any land, the Court may, if it thinks expedient, make an order vesting the land or any part thereof for such estate as the Court thinks fit in the purchaser or mortgagee or in any other person.
(2) For the purposes of this section every person who is entitled to or possessed of the land, or entitled to a contingent right therein, and is a party to the proceedings in which the order is made or is otherwise bound by the order, shall be deemed to be so entitled or possessed, as the case may be, as a trustee within the meaning of this Act.

6 The defendants read the affidavits of Stuart James Pennie, sworn 27 September and 6 October 2010. The plaintiff read his affidavits of 16 September and 5 October 2010.

7 Mr D K L Raphael appeared for the defendants. He provided the Court with written submissions which were refined during oral argument. His primary submission was that s 76 of the Trustee Act leaves the Court with no discretion to refuse the orders sought because the defendants have a charge and a legal right to have the charged property realised for their benefit.

8 He drew an analogy to s 66G(1) of the Conveyancing Act 1919 (NSW), which provides that:

(1) Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.

and which has been held to entitle a co-owner, except in very special cases, to an order as of right: see for example Williams v Legg (1993) 29 NSWLR 687.

9 It is well established that even under s 66G(1) relief is not as of right. The Court is not prevented from examining the circumstances to determine whether it is appropriate in any particular case to make an order. The inclusion of the word “may” in section 66G(1) has on its own been held to be sufficient indication of limited discretion: Ngatoa v Ford (1990) 19 NSWLR 72.

10 So far as s 76(1) of the Trustee Act is concerned, not only is the word “may” present, but the section further provides that the order may be made if the Court thinks it expedient. This is a clear indication that an order under the section is discretionary. The defendants’ primary submission is accordingly unsustainable.

11 Mr Raphael put a secondary submission, rather faintly to my observation, that if there is a discretion, it should be exercised in the defendants’ favour, because they are without means and need the money which a sale of the Land will produce.

12 There are however, in my view, compelling, if not overwhelming reasons why (to use the terminology of the section) it is not expedient to make such an order.

13 Whilst the defendants will almost inevitably object to components of the costs claimed and whilst it may be expected that some of those objections will be upheld leading to a reduction of the amount claimed, there is a clear and reasonable possibility (if not probability), that upon assessment of the plaintiff’s costs, the defendants will owe him money, not the other way around. It is inevitable at least that the amount owed to the defendants will be reduced.

14 The plaintiff resides on the Land. If it is sold and any part of the proceeds paid to the defendants, given their penurious circumstances, there is little or no prospect of recovery from them of any of it.

15 It is to be borne in mind that both the defendants’ entitlement to the monies the subject of Pembroke J’s declaration and the plaintiff’s entitlement to costs are derived from final orders in the same proceedings. I do not think it expedient that the secured property be the subject of an order for its realisation before the combined effect of all of the orders of the Court are known and before it is established which of the parties owes what to the other or others.

16 If special circumstances are required for the exercise of a discretion against making the orders sought, I consider that they are present in this case.

17 I should mention that I indicated to the parties that the assessment of the plaintiff’s costs might be more speedily achieved by referral of that matter to a referee under UCPR Pt 20 r 20.14, a course which I have taken in the past to achieve such a purpose. Counsel for the defendants eschewed the suggestion.

18 The cross-summons is dismissed with costs.

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